A comprehensive study based upon data from Spain shows a stark contrast between firms that adopt robot technology and those that do not. Spain has one of the highest robot density levels per worker in Europe. The data come from the Encuesta Sobre Estrategias Empresariales (ESEE), an annual survey of around 1,900 Spanish manufacturing firms with very detailed information about firms’ manufacturing processes, including the use of robots and other advanced technologies, costs, prices, employment, and so forth.

The graph of Robot Adopters vs. Non-Adopters, which is constructed from the ESEE dataset, provides a clear indication that the adoption of robots greatly influences the labor market. It shows that firms that adopted robots between 1990 and 1998 (‘Robot Adopters’) increased the number of jobs by more than 50% between 1998 and 2016, while firms that did not adopt robots (‘Non-Adopters’) reduced the number of jobs by more than 20% over the same period.

This study provides striking conclusions regarding the implications of production automation and robot technology. The data strongly suggests that Robot Adopters expand their scale of operations and create jobs, while Non-Adopters experience negative output and employment effects in the face of tougher competition. Aggregate productivity gains are partly driven by substantial intra-industry reallocation of market share and resources. In other words, high-productivity Robot Adopters take market share and jobs from low-productivity Non-Adopters. Contrary to some misconceptions around robots, embracing automation will grow jobs and the economy.

This Robotics & Automation article summarizes a new report from the World Economic Forum (WEF) focused on robots and jobs. The article is very upbeat and emphasizes that low-skilled labor will be replaced by high-skilled, higher-wage jobs. Within its report titled Reskilling Revolution: A Future of Jobs for All, the WEF strongly advocates for lifelong learning. Here is the report’s opening statement: As the types of skills needed in the labor market change rapidly, individual workers will have to engage in life-long learning if they are to remain not just employable but are to achieve fulfilling and rewarding careers that allow them to maximize their employment opportunities.

Re-training is the key to individual, business and regional success. There will absolutely be winners and losers in the emerging upheaval within worldwide labor markets. Those regions with unskilled laborers are most susceptible to job losses, but everyone should take heed. Those who embrace automation and re-training will uncover great opportunities for upward mobility on a global scale.

We often get asked this question about robots and jobs. Our simple answer is “no!”… but the detailed answer is much more complex. Yes, labor is shifting to robots for many low-skill jobs, especially ones that fit the “3 Ds” of Dirty, Dangerous or Drudgery. If you live in a high-wage region like the United States, most of these jobs have been already moved to lower-cost regions. On the flip side, robot automation creates new opportunities that extend well beyond replacing low-cost labor.

Three trends help illustrate the impact of robot automation on jobs:

(1) Robot technology has matured to a point where non-experts can quickly develop and deploy robot automation.

(2) For manufactured goods, the percentage of labor costs versus other costs (raw materials, electricity, transportation, etc.) greatly influences the economic advantage and adoption rate of automation.

(3) Collaborative robot (or CoBot) technologies enable people and robots to work together for better efficiency, quality, and safety, opening up applications in new markets beyond manufacturing.

Robot technology is becoming accessible to everyone

Robot technology has matured to a point where non-experts can quickly develop and deploy robot automation. Robot vendors have made big strides in simplifying their programming software. Much robot automation is now programmed via wizards and intuitive graphical interfaces. Machine learning is being applied to automate complex software algorithms (e.g. vision-based object identification). This ease of use makes automation more accessible to everyone, more available to entrepreneurs, and more open to new applications. Accessibility is a primary factor in disruption spreading to new markets – when a technology becomes available to everyone, the applications and users and innovation explode.

The labor percentage of manufactured goods is falling

For manufactured goods, the percentage of labor costs versus other costs (raw materials, electricity, transportation, etc.) greatly influences the economic advantage and adoption rate of automation. For many products, the labor cost of manufacturing is low relative to other costs. For example, this NY Times article shows why the average cost to manufacture one pound of yarn is lower in the United States than just about everywhere else in the world including China and India. As automation is added, labor costs are replaced by capital and electricity costs. Electricity is increasingly important for the cost and location of manufacturing. With relatively low energy costs, the United States is likely to on-shore more and more manufacturing jobs, in large part due to increased automation. And those US manufacturing jobs will provide higher-wages but be fewer in total number than the off-shore jobs that they replace.

CoBots leverage people and robots working together

CoBots are highly disruptive automation because CoBots are collaborative – they are safe to work alongside humans to augment dirty, dangerous or repetitive tasks. CoBots have built-in sensors that prevent them from causing injury in the event of a collision with a person or object. This enables CoBots to be used alongside people. There are many tasks that would be very expensive to automate, such as ones that integrate a multitude of sensory feedback or require complicated motion. Conversely, having a person do repetitive or dangerous tasks often does not make economic sense either. CoBots leverage the unique advantages of people and robots working together, and can achieve more efficient processes than either alone.

Conclusion: regional shifts in labor and manufacturing

Robots and jobs are related within a worldwide shift in the location and makeup of labor and manufacturing. Those regions that embrace automation, have a well-trained workforce, and have access to new technologies will win the race to innovate. For instance, China’s share of global manufacturing output has been flattening and may begin to decline if other regions continue to replace repetitive-task labor with automation.

Not only will robotics offer more efficiency and higher quality within manufacturing, robot automation will spill over into new markets such as hospitality and retail. Already there are novelty robot bartenders, robot fast-food cooks, and robot videographers to name a few new applications. At what point does robot automation become less of a novelty and more a requirement to be competitive? Our suspicion is that we are at an tipping point and the rate of change of robot adoption is going to accelerate.

So, how does our region of New Mexico fare in this economic shift? A recent study referenced by Albuquerque Business First notes that New Mexico gets a failing grade for the health of its manufacturing industry. This does not bode well for our region as new technologies like CoBots disrupt and transform the world’s manufacturing. There will be regional winners and losers as automation provides better economics and quality for medium and low volume manufacturing operations. Build With Robots is attempting to positively impact our region by making CoBot technology accessible to everyone. We are happy to partner with forward thinkers such as CNM Ingenuity, who are leading the way in building the workforce and business opportunities to benefit from this disruption.